Tuesday, June 18, 2013

6 gut checks pre open


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MarketWatch
 
Need to Know
JUNE 18, 2013

6 gut checks before the stock market's opening bell

By Shawn Langlois
 
Need to Know
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Good morning.

Today could mark the sixth consecutive session of 100-point swings on the Dow, which has only happened six other times. The record was set back in October 2008, when the index endured such fluctuations for 10 straight days, according to Bespoke Investment Group .

With investor hypersensitivity in full pulse-pounding bloom, we could eclipse that mark by next week. Stocks are setting up for a pop to the upside as the Fed meeting gets underway. For better or worse, that's all that seems to matter at this point.

"Gone, at least for now, are the days when economic and corporate fundamentals dictate market performance," says investment adviser Eric Parnell . "Instead, the outlook for financial markets in the months ahead essentially comes down to the verbiage and potential policy actions resulting from a single a policy meeting."

For those of you paralyzed by fear of the Fed's next move, I offer the comforting embrace of Nouriel Roubini and Ian Bremmer. The two penned a piece in which they said the Fed's exit "will be treacherous" either way. "Exiting too fast will crash the real economy, while exiting slowly will first create a huge bubble and then crash the financial system." In other words, crash if they do, crash if they don't.

There. Isn't that better?

Key market gauges: Futures on the Dow  and the S&P  are are moving higher in the wee hours, after the Nikkei  couldn't find its footing in yet another choppy session . Europe  is mostly range-bound, with the FTSE 100  the biggest winner among the major indexes.

Gold  is pushing fractionally lower early as investors take a cautious stance ahead of the Fed meeting. Crude oil  is also in stall mode for the most part, hovering around flat territory. On the currency front, the euro breached its highest level since back in February.

The economy: With the two-day Federal Reserve meeting grabbing all the attention this week, new U.S. home construction and consumer inflation numbers will sneak in today at 8:30 a.m. Eastern. The former is expected to have risen to an annual rate of 953,000 in May from 853,000 in April while the consumer price index is forecast to come in at a seasonally adjusted 0.2%. Read: Spotlight on economy .

Watch the SPDR Homebuilders ETF  for any reaction to the upcoming data. The gauge has been on fire amid the housing recovery, surging more than 50% in the past year. The sector got another boost on Monday as home-builder confidence turned positive for the first time in seven years.

The buzz:Dan Loeb is a hot topic on Google after the hedge-fund investor penned another letter to Sony Corp.  as part of his ongoing campaign to push the company toward IPOing its entertainment division.

Netflix  holds the top spot on the StockTwits trending list. The stock tacked on more than 7% after the company, in a shot across the bow of rival Amazon , announced a new deal  with DreamWorks Animation .

With the "biggest ever" Paris Air Show taking flight, both Boeing  and Raytheon  are also trending. Read more on Airbus, Boeing rivalry .

On the sparsely-populated earnings calendar, Adobe , FactSet  and La-Z-Boy  all report today. Read: Stocks to watch .

The chart of the day:Bill Luby from the VIX and more blog offers up historical hints of what to expect from the volatility gauge  in the days surrounding the Fed meeting. "There is no reason to expect that patterns which have persisted for the past 33 years to magically reappear for each FOMC announcement going forward, but I do believe that the historical pattern does say something about human nature, uncertainty and perceptions of risk," he wrote. If these trends hold any water, there are worse ideas than going long the VIX on Monday.
VIX and more
The call of the day: Japan is stealing all the headlines from Asia lately, but the smart money should take a hard look at South Korea , according to Goldman Sachs. "The inevitable jitters regarding QE tapering are not likely to impact Korean equities as much," the strategists wrote.  "Note the outperformance of Korea during the recent selloff." Aside from China, Goldman says Korea is the cheapest market from a P/E and price-to-book perspective. Further proof that South Korea could be the "it" country came from Mark Zuckerberg. The Facebook  boss ditched the hoodie and donned a suit to meet with President Park Guen Hye .

Random reads: The ingenious beer glass that may save humanity  and armor that may save a guinea pig , both brought to you by BuzzFeed.

Happy birthday to me, here's your copy of "Mein Kampf" .

A glimpse into Vladimir Putin's thug life , including the time he stole Bob Kraft's Super Bowl ring after saying "I could kill someone with this."

TechCrunch on "nerds and underdogs" and why "Silicon Valley is suffering from an acute fallacy of composition ."

A shark attack... in Texas ?

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